A Chapter 13 discharge does not wipe the slate clean. Some debts survive, no matter how faithfully you make payments for three to five years, and knowing which ones before filing changes how you build your case.
Support Obligations Never Go Away
Child support and alimony owed directly to a spouse or child are nondischargeable under 11 U.S.C. § 523(a)(5), and Chapter 13 does not provide an exception. Section 1328 actually goes further. Before a court will grant discharge, you must certify that all domestic support payments due up to that point have been paid. If you fall behind during the plan, the discharge itself may be delayed until you catch up.
Certain Taxes and Student Loans Stick Around
Recent tax debt, tax debts tied to fraud and unfiled returns are not touched by Chapter 13 discharge. Older income tax obligations sometimes qualify for discharge if they meet a narrow set of timing rules, but this determination is fact-specific. It is easy to get it wrong without a careful look at your account transactions.
Student loans are still harder to get rid of. They are excluded from discharge unless you can prove that paying them would cause undue hardship, and proving this requires filing a separate lawsuit within your bankruptcy case. The 2022 policy change by the Department of Justice and the Department of Education has simplified this process with a standardised form. However, it is not automatic. You still need to ask the court for this, and support your request.
Fraud, Restitution, and Injury-Related Debts
A debt that arises from false pretenses or actual fraud survives in your Chapter 13 bankruptcy case in the same way that it would survive in a Chapter 7 bankruptcy. So does criminal restitution or a fine imposed as part of a sentence, and so does a civil judgment for wilful or malicious injury that causes someone’s death or physical harm.
That last category catches people off guard. A judgment for a drunk-driving accident that causes physical injury follows bankruptcy. Property damage from the same accident, in contrast, can often still be discharged. The line between the two is narrow, but it makes a big difference to whoever is on the wrong side of it.
Secured Debts Come With Strings Attached
Bankruptcy can discharge your personal obligation to pay a debt, but it generally doesn’t erase the lien sitting behind it. If you keep your car or house through a Chapter 13 plan and continue to pay for it during the plan, you will continue paying for it for years afterwards on a long-term mortgage. If you stop paying, the lender can repossess your property or foreclose on it. Discharge or not, the outcome is the same.
What Chapter 13 Discharges That Chapter 7 Can’t
This cuts both ways. Chapter 13 has broader discharge than Chapter 7 in some specific areas, which is part of why some people choose it when they would qualify for a Chapter 7 case. Property settlement debts from divorce, as well as support obligations, can be discharged under Chapter 13, along with debt run up on credit cards to pay off tax bills that weren’t dischargeable themselves, as well as some government fines and penalties that otherwise would have survived.
Plan Around What Won’t Disappear
None of this makes Chapter 13 a wrong choice for most people who need it. It means that the plan has to take into account what will still be owed on the other side. A repayment plan based on discharging debt that was never intended to be discharged sets you up for an unpleasant surprise five years later, right when you think you’ll be finished.
Know What Your Discharge Will Actually Cover Before You File
Sorting out which debts will survive bankruptcy and building a Chapter 13 plan around that reality is the groundwork that Duncan Bankruptcy Law goes through with each client before a case is ever filed. Filing for bankruptcy in Georgia can be confusing, especially when some debts disappear and others don’t. If you are weighing Chapter 13 against Chapter 7 or wondering whether a specific debt on your list will actually disappear, contact Duncan Bankruptcy Law and get a clear answer before filing, not after.
